Its audience, the company seemed to say, just wasn't big enough. The future as they saw it was more secure in trying to unite digital media companies into a system big enough to attract big-dollar marketers.

"Scale matters," Matt Sanchez, CEO of Say Media, tells Mashable. "I think what you're seeing with some of these sales or acquisitions is a very similar concept. Scale matters there and I think it is more viable for Re/code to be part of a larger company and a larger portfolio and a larger footprint. I think that's what's driving a lot of these deals."

Digital journalism, in short, can only survive if it garners big numbers: tens of millions of users, hundreds of millions of dollars in funding, and clicks clicks clicks.

Or, as Kara Swisher told the New York Times when Re/code was acquired by Vox: "It’s not a secret that being a smaller fish is really hard."

Size is even more important to the survival of digital media than quality. Even though journalism, as an industry, has a long history of bragging about its higher-quality offerings, that niche argument doesn't carry water with readers or investors. Being good just isn't good enough.

As proof, the recent companies that have been in question include some of the most respected digital destinations: Gigaom, Re/code, Circa, FiveThirtyEight, which have been packed with star journalists and high-quality analysis or products.

More recently, Gawker — one of the older sites of new media — wrote a post disparaging the early traffic of the newest new media, three-month-old Fusion, which has hired a stable of well-paid, high profile journalists to build a new brand.

Re: the Gawker story. We're young and building. We launched our new site in February. This is last month. ¯\_(ツ)_/¯ pic.twitter.com/g8sIlYfjjQ

Media consultant Vivian Schiller, who previously served as the CEO of NPR, chief digital officer of NBC News and head of news and journalism partnerships at Twitter, suggested that critics and peers in media have been too quick to demand dominance from sites that are still new.

"There's no possible way [Fusion] is going to become a digital behemoth in just over a year," Schiller said. "Part of me wanted to scream, 'Give these people a chance.'"

The Facebook issue

This concern is based on the shaky foundation of Facebook's algorithm, which decides how many readers see a story and can render a publication a success or a flop.

Suddenly, with Facebook (and to a lesser extent sites like Twitter, Pinterest and reddit) it was possible to build audiences rapidly, and many did. The first generation of digital media upstarts had been built on gaming search engines. The second generation was building on social media referrals.

But as Facebook can giveth, so can Facebook taketh away. The platform's tightening embrace of video in some ways presents an opportunity for publishers, but it also points to Facebook's desire to limit the amount of referral traffic it sends elsewhere.

Ben Williams, editor of New York Magazine's digital side, said that Facebook traffic is still rising for his publication, but that there are broad concerns that things could be changing.

"While we continue to see Facebook traffic increase overall, we have seen some evidence that Facebook algorithm changes are decreasing the exposure of our content in fans’ newsfeeds," he said. "Over the last six months or so, reach per fan has declined. That’s a metric that is mostly under Facebook’s control. We’ve heard anecdotally that other publishers have seen a similar decline."

That idea was furthered by Facebook's recent introduction of Instant Articles, written and produced by news organizations but hosted almost entirely on Facebook's own platform. The beautifully presented, fast-loading articles have been a success, but a bittersweet one.

Even if Facebook traffic holds steady instead of declining, that still may not be good enough for digital media upstarts, whose survival depends on increasingly strict and complex metric measurements designed to please investors.

Many new entrants have been fueled by venture capital that often comes with expectations that traffic will keep growing, that helps produce more advertising revenue and a better payoff. If Facebook growth stops entirely, a question will begin to ring loudly — where does the growth come from next?

Scott Grimes, CEO of Woven Digital, which publishes a variety of websites including the UPROXX network and other lifestyle sites, said that it has become much more difficult to connect with people thanks to greater competition online.

"It's crowded for sure," he said. "It is very difficult to grow an audience right now if you're not a player that currently exists. Starting from zero or scratch right now, especially if you're in a relatively niche market, creating a business model off that is difficult to say the least."

Growing pains

It's a precarious situation — venture capital that seems in some ways predicated on the whims of Facebook — but that doesn't necessarily mean the sky is falling.

Schiller said that the recent struggles are more indicative of a young industry still finding its way than a larger systemic problem.

"I would be very careful extrapolate about the entire digital news industry because a few smaller proprieties have either not matched up to their hype or were acquired," Schiller said.

She pointed to various outlets that are still doing well, including Vice, Quartz and Mic, which recently raised another $17 million in funding.

Image: Tim Pannell/Corbis

This doesn't mean that mistakes haven't been made. Dan O'Keefe, general partner at venture capital firm Technology Crossover Ventures, said some media startups that may have thought the business had entirely changed had been met with rude awakenings.

"The rules of physics still apply," O'Keefe said. "Good content, diversified distribution, a broad audience that advertisers care about — those are the three things you still need to solve for while adapting to the evolving consumption models of consumers."

Adapt and change, but never forget: Scale matters.

Updated: This article was updated to remove data from CrowdTangle that indicated the number of news posts and news-related on pages on Facebook had increased in the past two years. CrowdTangle has said that the data was dependent on how many pages they were tracking and may not have been indicative of a larger trend.

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